Understanding who needs to file an income tax return in Luxembourg is crucial to avoid unpleasant surprises with the tax authorities. Whether you are a resident or non-resident, the rules vary depending on your tax situation and the types of income you receive. Here is a detailed guide to clarify this essential topic.

Resident Taxpayers

For residents of Luxembourg, filing a tax return (Form 100) is mandatory in several specific situations:

– High Income: If the annual taxable income exceeds 100,000 euros.
– Multiple Sources of Income: When income from multiple sources, such as salaries and pensions, exceeds 36,000 euros for tax classes 1 and 2, or 30,000 euros for tax class 1A.
– Income Not Subject to Withholding Tax: If you have income not subject to withholding tax exceeding 600 euros, such as rental income.
– Foreign Salaries and Pensions: When the income includes salaries or pensions paid by foreign employers.
– Income from Movable Capital: If the net income from movable capital subject to withholding tax exceeds 1,500 euros.
– Joint Taxation: Residents requesting joint taxation with their non-resident spouse and provisionally obtaining tax class 2.
– Income from Dividends or Royalties: When these incomes exceed 1,500 euros net (dividends represent a share of a company’s profits distributed to its directors or managers; royalties are payments made for the use of property or a right belonging to another person).
– Request from the Tax Administration: If the tax administration explicitly invites you to file a tax return.

Non-Resident Taxpayers (Cross-Border Workers):

Non-residents, including cross-border workers, must also file a tax return in certain specific cases:

– Assimilation to Residents: If a non-resident opts for assimilation to residents to benefit from the same tax rates, provided that 90% of their worldwide income is earned in Luxembourg or their net income earned outside Luxembourg is less than 13,000 euros.
– Income Exceeding 100,000 Euros: Any non-resident with taxable income exceeding this amount or, in the case of multiple remunerations, income exceeding 36,000 euros for tax class 1 or 30,000 euros for tax class 1A.
– High Income: If the taxable income exceeds 100,000 euros or, in the case of multiple remunerations, if the taxable income exceeds 36,000 euros for tax class 1 or 30,000 euros for tax class 1A.
– Income from Dividends: If the gross dividends exceed 100,000 euros.
– Income Not Subject to Withholding Tax: When taxable income in Luxembourg is not subject to withholding tax.
– Joint Taxation: If a non-resident requests joint taxation with their resident spouse and obtains tax class 2.
– Request from the Tax Administration: If the administration invites the taxpayer to file a tax return.

Voluntary Declaration

Even if the declaration is not mandatory, taxpayers can choose to file a voluntary declaration for various tax benefits. This can allow for the recovery of withheld taxes or benefit from deductions for certain expenses and charges, such as loan interest or childcare costs.

Annual Summary

For those who do not meet the conditions for mandatory declaration, there is the possibility of submitting an annual summary. This option is available to taxpayers who:

– Have been continuously employed in Luxembourg for at least 9 months of the tax year.
– Have earned at least 75% of their gross annual remuneration in Luxembourg.

For residents, it is also possible to choose this option if they have had their habitual residence in Luxembourg throughout the tax year or if they declare all salaries earned in Luxembourg and abroad.

Conclusion

Filing a tax return in Luxembourg depends on numerous factors related to income and individual tax situation. It is essential for each taxpayer to verify their own situation to avoid penalties and optimize their tax management.

If you have any questions or need further assistance regarding your specific tax situation, do not hesitate to contact us. Our team is here for you.